Oct 02, 2013

Obamacare – Taking a Deeper Look at Health Insurance Exchanges

Starting today, October 1, open enrollment starts in the Health Insurance Marketplace under the reforms of Obamacare. This is also referred to as the new health insurance exchanges. And today, with the American government “shutting down” over it, many consumers are utterly confused.

While the answer to why our government is folding over Obamacare is complex and needs more in-depth analysis to disentangle, one thing is certain – it “is moving forward [and] you can’t shut it down,” according to a post on Barack Obama’s verified Twitter feed. So, it remains very important to know what the exchange means for Americans who here and now have been granted access to online health insurance plans ready for immediate purchase.

First of all, the exchange is designed so that every American will be guaranteed to find comparable, affordable health coverage. It is also designed because most every American, as of January 1, 2014, will be required to have health insurance, otherwise a tax penalty will be imposed to those who forgo beyond March 31, 2014. But with many Americans receiving coverage from an employer, Medicare/Medicaid, or certain military or veteran’s plans, the exchange will likely be most sought after by those with low/moderate incomes who qualify for government subsidies (tax credits that can be cashed in on immediately to reduce monthly premiums). As well, the exchange will not deny, charge more, or exclude coverage to people with pre-existing conditions; premiums cannot be raised for policyholders who become ill; and core benefits will be covered just as they are in any other private policy – known as essential health benefits. 

But with only 6 months left for Americans get a true grasp on the exchange, here is a list of some other important information to know.

About the Plans:

  • Plans will vary from state to state, and you must enroll in your state (but multistate policies will likely be available for winter birds)
  • Plans will be provided by private insurance companies, but the exchange is run by either your state or federal government
  • Plans should be accessed through www.healthcare.gov or 1-800-318-2596 – this will lead you to individual state offerings
  • Enrollment for 2014 closes on March 31, 2014 – exceptions will only be granted to those who suffer a major life event (job loss, birth, marriage, divorce, etc.)
  • Penalties for not carrying insurance will be 1% of your income (or $95, whichever is greater);
  • Plans will be organized in a side-by-side format, for easy comparison shopping
  • Plan premiums cannot be more than 3x the rate they are for a young person
  • Plans will come in 4 levels – bronze, silver, gold, platinum – and each is relatively similar, but cost structures will vary (premium vs. out-of-pocket expenses)
  • Plans will cannot exceed $6,350 (individual) or $12,700 (family) in out-of-pocket expenses annually
  • Plans will require insurers to cover the cost of preventative care at 100% -- including annual checkups, cholesterol and blood pressure screening, etc – and plans for men and women can no longer have disparities
  • Catastrophic plans can be purchased, but tax credits cannot be applied to them
  • Plan premiums for the next year will always be made available during the open enrollment periods, so you can price shop and prepare for a switch if necessary
  • Plan premiums cannot be raised by insurers for individuals from year to year, only for everyone in a policy group – in other words, everyone who bought the same plan for the same year
  • Plan levels will indicate differences in doctor networks and hospitals, and various medications and prescriptions will be covered differently
  • Plans will be available to those who are self-employed or own a small business with less than 50 employees

About the Plans and You:

  • Subsidized coverage in the forms of tax credits will be available to people between 100% and 400% of the poverty line – or about $23,550 and $94,200 for families of four – here is a calculator to help you determine your eligibility
  • Out-of-pocket expenses can be adjusted for people between 100% and 250% of the poverty line – these are known as cost-sharing reductions (available only in the silver plan)
  • You can “cash in” (all at once) on tax credits immediately (or over time) to help pay your monthly premiums – but for those whose income may increase, it might be best to conservatively use the credit to avoid owing the IRS down the road (remember to report all income/family size changes to the exchange)
  • You can find out if your doctor accepts an exchange policy your are considering by cross-referencing a directory that every plan is requited to provide
  • You can determine medication coverage under the exchange by also cross-referencing the summary of benefits that each plan will provide
  • If you have employer provided health care coverage, but you are considering an exchange policy, remember to weigh your options carefully – most exchange policies are not worth the switch, and you should discuss this with your employer
  • If you do not qualify for Medicaid (and only 26 states have adopted Medicaid’s expansion to everyone under 65 if they earn up to 138% of the poverty line), you do qualify for an exchange policy – but it is likely going to be a pricey venture since you will not qualify for subsidies
  • Only those whose premiums would exceed 8% of their income, have an income below the filing threshold, qualified for Medicaid in a state that does not recognize this, are an illegal immigrant, incarcerated, are in an Indian tribe, or qualify for religious reasons, will be exempt from the requirement to carry health insurance

Visit our Health Care Reform page for more helpful information, or check out this post to get more facts and figures related to the Affordable Care Act and exchange policies.